Buying a property is a big commitment, but throw the word “investment” into the mix and suddenly it gets even more intimidating! Don’t worry, you’re in the right place.
What do you think of when you hear investment? Maybe stocks? How about a few bonds?
Although these are investments, so is a property, especially when you list it on VRBO! From 2012 to 2017, the Housing Price Index increased nearly 40%. This means not only would VRBO provide cash flow, but barring another crash, your home could grow in value at the same time.
When you’re looking to buy a property for VRBO use, just like any investment it is important to consider particular metrics that would affect your return! In the vacation rental world, these metrics are commonly considered to be the Average Daily Rate (ADR) and your occupancy rate. By combining these two, we start to see the potential of each property as an investment. Not sure what ADR is? See our article titled “What is the Average Daily Rate (ADR) for a VRBO in Vail?”
Let’s say your VRBO property is located in Vail and you want to know how much it may cashflow. Not including other expenses, we can easily predict the revenue of your unit. Simply take the ADR and multiply it by the Average Occupancy to find out how much you may bring in. For this case in particular, Vail’s ADR is about $500 with an Occupancy of 42% annually. By taking 500 and multiplying it by .42, the daily expected value is $210. Multiply that by the number of days in the month you want to predict and now we have an Investment Pro-Forma!
Decide What You Want
Deciding what is important to you is often overlooked when choosing an investment property. Just because it’s an investment does not mean you can’t enjoy it! In fact, one of the best things about VRBO is using it whenever you feel like it. Want to know what’s available in Vail? Just take a look at our VRBO Real Estate in Vail article.
Making your VRBO appealing to guests can give you a higher return, so why not buy a place with great features? One of the most overlooked luxuries in Vail is parking. Having extra space to park can be critical when utilizing VRBO with your home. Another great amenity to provide is a private entrance for guests! This may come in handy if you would like to rent out seperate levels of a property or otherwise. Do we even need to mention hot tubs?
For more content on amenities, see “Amazing Amenities” on our VRBO Real Estate in Vail article.